Don't get too relaxed about your pension
George Osborne might leave pensions alone for now, says Merryn Somerset Webb. But don't count on it staying that way.
It's been a good week for readers trying to save. Last month we suggested that you panic about your pension provisions. With George Osborne having made it pretty clear that he wasn't done with his tax relief tinkering, we figured there was a very strong chance that higher earners would see their reliefs slashed. So we told you to pile cash in while you still could. I suspect a good many of you have done just that (I certainly have). That's good saving is almost never bad. But the good news is that the urgency seems to be gone.
Osborne has let it be known that he doesn't intend to make more major changes to the pension system in next week's Budget: you no longer need to feel panicked into super-scrimping in order to get a few more tax-free pennies into your pension wrapper before the 15th. That said, we don't think you should relax. The UK government is still broke and the tax relief on pension contributions is still very expensive. This isn't going away: at some point after the referendum, the 25% tax-free lump sum will go and so will higher and top-rate tax relief. This is not an "if", but a "when".
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